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ETFs to Ride the Nasdaq Composite's Much-Awaited Comeback
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The Nasdaq Composite Index has witnessed its best day since November 2020 after rallying 3.7% on Mar 9, 2021. The index, believed to have fallen into the correction territory, was seeing troubled times as high-growth tech stocks traded in the red due to rising U.S. 10-year Treasury yields and growing inclination for cyclical sector stocks. In fact, the Nasdaq Composite was down 4.4% in the current month as of Mar 8. Yesterday’s session saw strength in major-tech names like Apple (AAPL - Free Report) and Facebook , which climbed more than 4% each while Amazon (AMZN - Free Report) was up 3.8%.
Notably, the U.S. 10-year Treasury yield declined more than 5 basis points to 1.54% after inching up as high as 1.62% on Mar 8, per a CNBC article. It is a positive development for the tech-heavy index as high yields put pressure on high-valuation areas of the market, per a Reuters article. It is a known fact that rising interest rates disproportionately affect high-growth technology players as stated in the above-mentioned article.
In this regard, Chris Larkin, managing director of trading and investing product at E-Trade Financial, said that “Corrections ... create natural inflection points for traders. Let’s not forget that less than a year ago, traders interpreted one of the biggest negative macro events in market history as a buying opportunity, so there’s little reason to think otherwise given all the positive signals around us today”. This was mentioned in a CNBC article.
Amid the coronavirus pandemic, trends like work-from-home, online-shopping, digital payments, video streaming and video games gained huge popularity as the ‘new normal’ trends.
The pandemic also provided a push to the e-commerce industry as people still prefer staying indoors and shopping online for all essentials, especially food items.
Cloud computing also emerged as a key technology and is keeping up with the growing work-from-home trend in the fight against coronavirus. It is supporting organizations in remotely processing a lot of information, developing and running key applications and services, and helping employees across the world collaborate while working.
In the wake of the pandemic, cloud technology adoption is projected to witness robust growth in sectors where the work-from-home initiatives are helping sustain business functions. Notably, the global cloud computing market size is projected to rise from $371.4 billion in 2020 to $832.1 billion by 2025, seeing a CAGR of 17.5%, per a ResearchAndMarkets.com report.
Gartner reportedly projected the end-user spending on public cloud computing to increase 18.4% in 2021, globally, to a total of $304.9 billion, indicating a rise from an estimated $257.5 billion in 2020.
ETFs to Gain
Investors aiming to ride the Nasdaq bulls could consider the following ETFs. These funds might see massive trading volumes in the days ahead if the aforementioned trends stay:
This ETF provides exposure to 102 largest domestic and international non-financial companies listed on the Nasdaq by tracking the Nasdaq-100 Index. QQQ is one of the largest and most popular ETFs in the large-cap space with an AUM of $141.10 billion. It charges investors 20 bps in annual fees (read: 5 Beaten-Down Stocks of Nasdaq ETF With Upside Potential).
For a more bullish approach, TQQQ could be an excellent choice. The fund tracks the Nasdaq-100 Index and offers thrice the returns of the daily performance. It charges 95 bps in fees and expenses and manages an AUM of $9.44 billion.
Investors seeking big gains in a short span can bet on QLD. It provides twice the return of the Nasdaq-100 Index’s daily performance. The fund has AUM of $3.44 billion. It charges the same expense ratio as TQQQ (read: Ride the Impressive Nasdaq Rally With These 5 ETFs).
This ETF tracks the Nasdaq Composite Index, holding a broad basket of 1,010 stocks. It has AUM of $3.70 billion. The expense ratio comes in at 0.21%.
First Trust NASDAQ-100 Equal Weighted ETF (QQEW - Free Report)
Holding 103 stocks, this fund replicates as closely as possible, before fees and expenses, the price and yield of the NASDAQ-100 Equal Weighted Index. It amassed $1.17 billion in its asset base and has an expense ratio of 0.59%.
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ETFs to Ride the Nasdaq Composite's Much-Awaited Comeback
The Nasdaq Composite Index has witnessed its best day since November 2020 after rallying 3.7% on Mar 9, 2021. The index, believed to have fallen into the correction territory, was seeing troubled times as high-growth tech stocks traded in the red due to rising U.S. 10-year Treasury yields and growing inclination for cyclical sector stocks. In fact, the Nasdaq Composite was down 4.4% in the current month as of Mar 8. Yesterday’s session saw strength in major-tech names like Apple (AAPL - Free Report) and Facebook , which climbed more than 4% each while Amazon (AMZN - Free Report) was up 3.8%.
Notably, the U.S. 10-year Treasury yield declined more than 5 basis points to 1.54% after inching up as high as 1.62% on Mar 8, per a CNBC article. It is a positive development for the tech-heavy index as high yields put pressure on high-valuation areas of the market, per a Reuters article. It is a known fact that rising interest rates disproportionately affect high-growth technology players as stated in the above-mentioned article.
In this regard, Chris Larkin, managing director of trading and investing product at E-Trade Financial, said that “Corrections ... create natural inflection points for traders. Let’s not forget that less than a year ago, traders interpreted one of the biggest negative macro events in market history as a buying opportunity, so there’s little reason to think otherwise given all the positive signals around us today”. This was mentioned in a CNBC article.
Amid the coronavirus pandemic, trends like work-from-home, online-shopping, digital payments, video streaming and video games gained huge popularity as the ‘new normal’ trends.
The pandemic also provided a push to the e-commerce industry as people still prefer staying indoors and shopping online for all essentials, especially food items.
Cloud computing also emerged as a key technology and is keeping up with the growing work-from-home trend in the fight against coronavirus. It is supporting organizations in remotely processing a lot of information, developing and running key applications and services, and helping employees across the world collaborate while working.
In the wake of the pandemic, cloud technology adoption is projected to witness robust growth in sectors where the work-from-home initiatives are helping sustain business functions. Notably, the global cloud computing market size is projected to rise from $371.4 billion in 2020 to $832.1 billion by 2025, seeing a CAGR of 17.5%, per a ResearchAndMarkets.com report.
Gartner reportedly projected the end-user spending on public cloud computing to increase 18.4% in 2021, globally, to a total of $304.9 billion, indicating a rise from an estimated $257.5 billion in 2020.
ETFs to Gain
Investors aiming to ride the Nasdaq bulls could consider the following ETFs. These funds might see massive trading volumes in the days ahead if the aforementioned trends stay:
Invesco QQQ (QQQ - Free Report)
This ETF provides exposure to 102 largest domestic and international non-financial companies listed on the Nasdaq by tracking the Nasdaq-100 Index. QQQ is one of the largest and most popular ETFs in the large-cap space with an AUM of $141.10 billion. It charges investors 20 bps in annual fees (read: 5 Beaten-Down Stocks of Nasdaq ETF With Upside Potential).
ProShares UltraPro QQQ (TQQQ - Free Report)
For a more bullish approach, TQQQ could be an excellent choice. The fund tracks the Nasdaq-100 Index and offers thrice the returns of the daily performance. It charges 95 bps in fees and expenses and manages an AUM of $9.44 billion.
ProShares Ultra QQQ (QLD - Free Report)
Investors seeking big gains in a short span can bet on QLD. It provides twice the return of the Nasdaq-100 Index’s daily performance. The fund has AUM of $3.44 billion. It charges the same expense ratio as TQQQ (read: Ride the Impressive Nasdaq Rally With These 5 ETFs).
Fidelity Nasdaq Composite Index ETF (ONEQ - Free Report)
This ETF tracks the Nasdaq Composite Index, holding a broad basket of 1,010 stocks. It has AUM of $3.70 billion. The expense ratio comes in at 0.21%.
First Trust NASDAQ-100 Equal Weighted ETF (QQEW - Free Report)
Holding 103 stocks, this fund replicates as closely as possible, before fees and expenses, the price and yield of the NASDAQ-100 Equal Weighted Index. It amassed $1.17 billion in its asset base and has an expense ratio of 0.59%.
Want key ETF info delivered straight to your inbox?
Zacks’ free Fund Newsletter will brief you on top news and analysis, as well as top-performing ETFs, each week. Get it free >>